Measuring poverty
Lozada, Carlos
CARLOS LOZADA MEASURING POVERTY Harder than it looks On October 17, the United Nations observed the International Day for the Eradication of Poverty. UN Secretary General Kofi Annan used the...
...We're already there if we'd only wake up and assess the facts," argued Bhalla in a recent interview...
...One could easily dismiss this debate as relevant only to the careers and egos of a few dyspeptic economists who really should get out more...
...As with much in the economics profession, part of the dispute comes down to contrasting methodologies...
...That percentage is below the MDG target of 15 percent by 2015...
...The contrast between Annan's statement and Bhalla's conclusions highlights an ongoing, acrimonious debate among economists, policymakers, and activists...
...joked Deaton...
...Ravallion chastises Bhalla for relying on national accounts rather than household survey data the bank and other analysts more commonly use to assess poverty in different nations...
...UN Secretary General Kofi Annan used the occasion to remind the international community that "approximately 1.2 billion people struggle on less than a dollar a day...
...Well, try economist Surjit Bhal-la, a former World Bank staffer and the author of Imagine There's No Country: Poverty, Inequality, and Growth in an Era of Globalization (Institute for International Economics, 2002...
...Who can argue with such a laudable purpose...
...With the population increase over the same period, the sheer numbers of poor people have barely budged...
...Interestingly, in his statement on the International Day for the Eradication of Poverty, Kofi Annan split the difference, using his view of persistent poverty as a rallying cry for more progress on "free and equitable" trade, and for a new "global partnership" in favor of development...
...Academics and activists opposed to the free-trade, promarket policies implemented during the 1990s usually point to increasing poverty, while some pro-trade analysts highlight studies showing declining poverty as proof that their policy perspectives are correct...
...The World Bank estimates that global poverty has declined only slightly, from 28.7 percent in 1987 to 22.7 in 1999...
...Depending on which views of poverty trends gain greater circulation, the recent international push toward greater aid to poor countries may strengthen (if poverty is perceived as worsening) or diminish (if poverty seems to be abating...
...Yet despite its academic and methodological overtones, this question has serious real-world consequences...
...Indeed, views on the poverty question are sometimes filtered through ideological positions over aid and trade policy...
...You have to choose whether to ask [people] to recall how much they spent over the past week or how much they spent over the past month," said Deaton...
...Yet even the much cherished household surveys are a source of contention...
...He simply contends that the goal has already been achieved...
...He therefore urged the world to pursue the Millennium Development Goal (MDGs), a set of objectives issued in 2000 that deal with the alleviation of poverty and promoting economic progress in poor countries...
...That one-week recall period, he explained, usually produces much higher weekly spending- and therefore lower poverty-than the one-month recall period...
...The sharp disagreement over this seemingly simple matter reveals new battle lines in the international development community and threatens the interests of the world's poor-however many they may be...
...In a memorable IMF Survey interview appearing in July 2000, leading Princeton University economist Angus Deaton highlighted the arbitrariness of the household expenditure surveys employed to measure poverty...
...He estimates that the proportion of poor people in the world declined from about 30 percent of the total population in 1987 to 13 percent (or about 650 million people) in 2000...
...Bhalla does not oppose poverty eradication-far from it...
...It is little comfort for the world's poor to learn that contrasting views on their true plight can be used to justify biases from different sides of the political spectrum.l spectrum...
...There is no time to lose if we are to reach the Millennium Development Goal-agreed by all the world's nations-of halving by 2015 the proportion of people who live on less than a dollar a day/' contended Annan...
...He exhorted poor and rich countries alike to "rededicate themselves" to achieving that objective...
...Is the problem getting better or worse...
...World Bank poverty specialist Martin Raval-lion has taken Bhalla to task for his methods in journal articles, research papers, and public forums...
...How many poor people are there in the world...
...That must be the most successful poverty-reduction program in the world...
...Deaton said that official poverty in India, for example, would be cut in half if authorities there shifted their surveys from one-month recall periods to one-week recall periods...
...Poverty measures at the national, regional, or global level can go a long way toward determining which poor countries will be eligible for some form of debt relief or which countries will receive foreign aid and on what terms...
Vol. 130 • November 2003 • No. 19
